Context: Recently, Central Electricity Regulatory Commission (CERC) introduced the concept of multiplier for renewable energy certificates (RECs) for new projects based on various RE technologies.

Key Highlights

• The certificate multiplier will be applicable for 15 years from the date of commissioning of the project.

• CERC has assigned a certificate multiplier value of 1 for on-shore and off-shore wind projects in the next 3 years.

• While Hydro has been assigned a value of 1.5.

• Biomass and bio-fuel projects have been assigned the highest certificate multiplier of 2.5.

Significance

• Introducing a technology multiplier will help boost adoption of new and costly RE technologies depending on the type of technology to be encouraged.

• Besides, the concept will provide an avenue to offer incentives for promoting less mature technologies.

Renewable Energy Certificates (REC)

• RECs are a market-based instrument that certifies the bearer owns one megawatt-hour (MWh) of electricity generated from a renewable energy resource.

• Once the power provider has fed the energy into the grid, the REC received can then be sold in the open market as an energy commodity.

• RECs earned may be sold to other entities that are polluting as a carbon credit to offset their emissions.

• REC swaps consist of trading RECs to profit from the disparity between the buy and sell price.

• Many states have varying RPS standards, this increases opportunities to swap.

How it Works?

• A REC acts as an accounting mechanism for solar, wind, and other green energies as they flow into the power grid.

• This accounting and returning energy to the grid is necessary because electricity is difficult to store in batteries.

• So, most renewable-generated power, which is unused by the creator is fed back into the power grid for use by other customers.

• The provider of renewable electricity will then receive a REC.

• Energy Certificates can be sold, but are used as a credit against their own power usage.

Significance

• It will assist states in meeting administrative requirements (like RPOs) by succeeding geographic restrictions on renewable potential in various states.

• Renewable Purchase Obligation is the obligation to purchase minimum level of renewable energy out of the total consumption by the Obligated Entity.

• RECs separate the electricity component from the green/environmental characteristics of renewable-energy-generated power.

• After that, both components might be exchanged independently.

• RECs aid in stimulating the generation of renewable energy above and beyond the RPO state limit.

By: Shubham Tiwari